Oil, Gas and War: Putin’s Choices in Kazakhstan and Ukraine

Oil, Gas & WarPutin’s Choices in Kazakhstan & Ukraine

Nikola Mikovic looks at the Kremlin’s response to two crises on the borders of Russia, and sees strategic energy reserves as a key factor in its decision making

While the world has been waiting for the United States and Russia to continue their talks on “strategic stability”, violence and chaos have spread all over Kazakhstan. What started as peaceful protests over fuel prices have quickly turned into a large-scale anti-government movement in the energy-rich Central Asian nation. 

Kazakhstan has a history of labour strikes and mass protests. On 16 December, 2011, Kazakh security forces open fire on unarmed protestors in the city of Zhanaozen, in the south-west of the country. They were demanding higher salaries and better working conditions at the nearby oil fields. According to the official data, 17 people were killed.

Three years later, some British media reported that former Prime Minister Tony Blair gave the then Kazakh President Nursultan Nazarbayev public relations tips on how to defend a massacre. In 2018 and 2019, series of rallies in major Kazak cities were held, while in the summer of 2021 the Central Asian country witnessed several large-scale labour strikes. Although demonstrations are nothing new for Kazakhstan, very few people could predict that the Russian ally in the Collective Security Treaty Organization (CSTO) and the Eurasian Economic Union would be on the brink of a civil war. 

As Byline Times reported in October 2020, covering the turmoil in neighbouring Kyrgyzstan, there were fears in Nur-Sultan that the crisis could eventually spill to Kazakhstan.

That is exactly what happened in January 2022. A spike in fuel prices triggered a national crisis in the former Soviet republic. Although the Government stepped down, violent protests continued and President Kassym-Jomart Tokayev requested the support of the CSTO, claiming the unrest was the work of foreign-trained “terrorist gangs”. Kazakhstan’s leader, however, did not name the countries where the alleged terrorist came from. 

“About 20,000 terrorists, including foreigners, broke into morgues to steal the bodies of their dead comrades so there may not be any evidence”, Tokayev stressed, announcing that CSTO troops will leave Kazakhstan by January 21. 

Ever since Nazarbayev, seen by many as “the father of the nation”, handpicked Tokayev as his successor in 2019, new Kazakh leadership continued to implement Nazasbayev’s “multi-vector” foreign policy. Although the country is economically, culturally and militarily connected with Russia, Kazakhstan under Tokayev aimed to preserve good ties with all other major foreign actors operating in the Central Asian nation.

The United States and Kazakhstan continued to hold their annual Steppe Eagle military exercises, with the participation of troops from the United Kingdom, Tajikistan, Uzbekistan and Turkey. Moreover, until recently the US reportedly had several military biological laboratories in Kazakhstan. 

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Now that Russian troops are on the ground in Kazakhstan, Moscow is expected to increase its influence in Nur-Sultan. As Margarita Simonyan, the editor-in-chief of the English language television news network RT, recently hinted, the Kremlin’s “help” to Tokayev is all but free.

Kazakhstan’s President may soon have to return the favour to Moscow by recognising the Kremlin’s incorporation of Crimea into the Russian Federation, making Russian an official state language, changing the Kazakh alphabet back to Cyrillic and closing all “anti-Russian” non-governmental organisations operating in the country. 

Although ethnic Russians make up some 20% of Kazakhstan’s population, their fate is unlikely the reason why Moscow deployed its troops to the neighbouring nation. The Russians predominantly live in the north of the country, and that part of Kazakhstan does not have any significant natural resources.

Traditionally, the Kremlin’s foreign policy has been driven by the interests of Russia’s major energy corporations. Some of them, namely Lukoil, Zarubezhneft, as well as Rosneft, are involved in development of some of Kazakhstan’s largest oil fields, located mostly in south-western Kazakh regions. 

It remains unclear why would the West destabilize its third-largest energy supplier and the biggest supplier to the EU nuclear energy industry with 21% of the EU uranium demand. 

Western and Chinese energy companies are also very active in the Central Asian nation. Major multinational corporations, including Chevron, Exxon Mobil and Shell operate in the country, with Chevron being Kazakhstan’s largest private oil producer.

According to reports, in 2019 American oil producers accounted for roughly 30% of the oil extracted in Kazakhstan, compared with about 17% produced by Chinese companies, and just three per cent by Russia’s Lukoil. Does that mean that Russia and its CSTO allies are in Kazakhstan to protect the interests of its Western and Chinese partners?

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There is speculation that the events in Kazakhstan are part of a Western “asymmetric response” to the Russian “ultimatum” regarding Ukraine. Although the deployment of a CSTO military contingent to Kazakhstan comes on the eve of very important negotiations between Russia and the United States, it is worth pointing out that more than 80% of Kazakhstan total oil and gas exports go to the European Union. In other words, it remains unclear why the West would destabilise its third-largest energy supplier and the biggest supplier to the EU nuclear energy industry with 21% of the EU uranium demand. 

On the other hand, Russia’s actions in Kazakhstan could be a signal to the West that the Kremlin may also intervene in Ukraine, in case negotiations with the United States fail. However, unlike Kazakhstan, Ukraine does not have any significant gas and oil reserves. That could be the reason why Russia refused to deploy its troops to Ukraine in 2014, even though ousted Ukrainian leader Viktor Yanukovich reportedly sent an official letter to Russian President Vladimir Putin, asking for military intervention.

Instead of preserving the whole country in its sphere of influence, in 2014 Moscow decided to seize only energy-rich Ukrainian regions of the Donbas and Crimea.

The Kremlin now, through its proxies and local oligarchs, de facto controls coal production in the Donbas. After Russia’s annexation of Crimea, Ukraine lost 80% of its gas deposits in the Black Sea, which means that, from the energy perspective, Russia now hardly has a reason to capture any new territories in the Eastern European nation.

Still, Russia’s intervention in Kazakhstan has demonstrated that Moscow is capable to act quickly and not in a standard manner. Russia has deployed to Kazakhstan the very same military units – 76th Guards Air Assault Division from Pskov and 45th Guards Spetsnaz (Special Purpose) Detached Brigade from Kubinka – that played the major role in Crimea in 2014. Thus, in case the Donbas conflict escalates, it is entirely possible that Russia will intervene to protect not Russian-speaking population in south-east Ukraine, but Moscow’s energy interests in the region.